Ambac Ditches Plan to Raise Capital
In the face of a stock price that has been battered by more than 70 percent in two days, and bowing to pressure from shareholders, Ambac Financial Group, Inc. said Friday morning that it will ditch a previously-announced plan to raise additional capital. "Raising capital is not an attractive option at this time," the company said in a statement. On Wednesday, the insurer ahd said it would seek to raise $1 billion in equity as part of a bid to maintain its AAA ratings from each of the major rating agencies. The move comes as an investor group led by Evercore Asset Management went public with its campaign to prevent Ambac from "throwing good money after bad," as the investment manager said in a letter to Ambac's board that "the sale of $1 billion or more of new equity amounts not so much to raising capital as it does to a sale of the company at an extremely depressed price." Ambac's shares have been under siege the past two days, dropping more than 70 percent from $21.19 on January 15 to $6.13 on market close January 17. Moody's Investors Service said Thursday that it would reassess the capital adequacy of the bond insurer, one month after previously affirming the company's financial strength, and placed the company on a negative ratings watch. It's unclear what Ambac's next move is; some have suggested the insurer will cease underwriting new policies and allow its insured portfolio to run off. For more information, visit http://www.ambac.com.